Official Blog of the Institute of Local Government Studies, University of Birmingham

Direct Payments Act 1996: a legislative game-changer on a slow burn

Some legislative game-changers have a high-profile passage through Parliament, with much media fanfare about how things will never be the same again: gay rights legislation, for example, fits into this category. Other game-changers proceed more quietly, with their immediate implications limited to a relatively small number of people. This latter type can be characterised as ‘valve’ legislation, in the sense that once passed there is no going back, even if this is not fully appreciated at the time.

The Community Care (Direct Payments) Act 1996 is an example of valve legislation. Its passage followed from the persistent and passionate campaigns of people with disabilities to gain more control over their support. It made legal the transfers of cash to people eligible for local authority funding. Some local authorities had been finding ways to make such payments for years, with a wary glance at the apparent ban on such activity in the National Assistance Act 1948. But the passage of the Act gained little media interest beyond the Society Guardian, and it was assumed by government that the payments would only be taken up by a minority of younger people with physical disabilities. Indeed people over 65 weren’t eligible for the payments. The Act gave local authorities the power but not the duty to grant the payments, meaning that access to them was heavily dependent on a supportive social services department.

Nearly twenty years later the English government is committed to getting a direct payment or managed budget (where the local authority or third party holds the money on your behalf) to 70 per cent of people receiving local authority-funded social care – more if possible. In a succession of modifications to the law and its regulations, direct payments are now expected to be the default funding mechanism for people with physical disabilities, learning disabilities, older people and people using mental health services, and are available to carers. They have expanded to parents with disabled children and are being proposed for children with special educational needs and for adoptive parents. They are being introduced for aspects of NHS care as personal health budgets, which constitutes a radical change to health funding albeit on a small scale at present. The policy has cross-party support, being pursued as assiduously by the Coalition government as by their New Labour predecessors.

Why was the 1996 legislation able to trigger such a systemic change? Here are four suggestions.

It was a simple idea: give the money straight to the user. Although the implementation has been enormously complex, it was an easy idea to explain, helping its proliferation and popularity

It fitted the political mood, both to expand choice to people as consumers of public services (seeing that as the best way to improve outcomes) and to break down barriers for people with disabilities on rights basis. Governments since the 1980s have promoted both strands of legislation, even though there are tensions between them.

It didn’t seem to cost anything, since money was simply being allocated differently. This aspect of the policy appealed to the Conservative government that first introduced the policy and to subsequent New Labour and Coalition governments. It is particularly appealing in a period of public spending austerity. Evidence for cost-savings has been harder to establish in practice, however.

It created a wedge that could be used by policy entrepreneurs to push for further change. Once the principle was established that disabled adults under 65 were eligible for such payments it was very hard to argue on a principled basis that they should not be extended to other people in receipt of local authority support. Organisations such as In Control pushed at the boundaries of the legislation to broaden its range and built national alliances of supporters to agitate for its extension.

All these factors created a permissive legislative and policy context in which devolved budgets have come to be seen as the way to respond to a whole range of social issues. However behind the simplicity and potency of the idea lie two challenges which have not yet been resolved, and will continue to pose issues for future government.

The first is implementation. The simple insights of personal budgets and direct payments have proved very difficult to apply to a hugely complex, variable and underfunded social care system. Personal health budgets may help to integrate health and social care provision but it is difficult to do this when social care funding is means-tested and health funding is not.

Second, there is a normative challenge: if people are better at spending their own money than the state is at spending it on their behalf, what is the state for (aside perhaps from channelling money from rich consumers to poor ones)? This vision of a voucher state has long been cherished by some on the right of the political spectrum. Raising questions about the need for a welfare state was not the vision of any of the advocates of the Direct Payments Act 1996 but such debates affirm that the full consequence of that Act are not yet known.

Catherine Needham is Reader in Public Policy and Public Management at the Health Services Management Centre, University of Birmingham, and is developing research around public service reform and policy innovation. Her recent work has focused on co-production and personalization, examining how those approaches are interpreted and applied in frontline practice. Her most recent book, published by the Policy Press in 2011, is entitled, Personalising Public Services: Understanding the Personalisation Narrative.